Infrastructure investor APA Group (APA) has been on the MM radar for some time with a combination of higher expected interest rates plus the prospect of an equity raise weighing on the share price in recent times. The second piece of that puzzle is the interesting bit, APA looks to be positioning itself to buy Basslink, an electricity interconnector that allows the trade of electricity between Tasmania & the National Electricity Market. If they were to buy this critical asset they would almost certainly need to raise equity. Markets (at times) are efficient and are pricing in this eventuality.
APA is a highly defensive, regulated utility business with an expected yield over the coming 12 months of 5.83% (unfranked). We are now looking for an opportunity to add APA to the Income Portfolio, leaving room to participate in any equity raise.
MM is now bullish APA for yield
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